Grainger reported second-quarter underlying organic sales growth of 13.7% year over year and a 120-basis-point expansion in operating margin, resulting in 20.5% earnings per share growth. Management raised full-year guidance, but shares fell significantly the morning of Aug. 4.
Grainger generates some of the fastest inventory turns in the industry driven by astute inventory management and a dense customer base.
Bears
Amazon.com Business remains an ever-present threat to Grainger’s endless assortment business, possessing the scale and product breadth required to compete.
Founded in 1927, W.W. Grainger originally distributed various motors via a mail-order catalog. Over the course of the 20th century, the firm expanded into new industrial product categories and launched its first digital catalog in 1995. Today, the company organizes itself into two segments focused on different customer bases. Its larger segment, high-touch solutions, offers a vast array of maintenance, repair, and operations, or MRO, supplies and bespoke inventory management services to larger businesses. Its smaller segment, endless assortment, operates two online platforms, Zoro and MonotaRO, that offer comprehensive catalogs of MRO supplies to smaller businesses. Grainger has operations throughout the world but primarily generates sales within the US.